Dana Incorporated has signed a definitive agreement to purchase the Drive Systems segment of the Oerlikon Group, a Switzerland-based manufacturer, according to an announcement.
Under the terms of the agreement, Dana will acquire Oerlikon’s Drive Systems business for CHF 600 million (approximately US$600 million). Committed financing has been arranged to complete the transaction, which will be immediately accretive to earnings upon closing. The acquisition is expected to close in late 2018 or the first quarter of 2019, pending regulatory approvals.
Consistent with Dana’s enterprise strategy, the acquisition of Oerlikon Drive Systems provides numerous opportunities to drive profitable growth, according to the company. Among them, the transaction:
- Complements and extends Dana’s current technology portfolio, especially with respect to high-precision helical gears for the light- and commercial-vehicle markets and planetary hub drives for wheeled and tracked vehicles in the off-highway market;
- Provides products, controls and software that support vehicle electrification in each of Dana’s end markets — light vehicle, commercial vehicle and off-highway;
- Optimizes Dana’s global manufacturing presence to be closer to customers in key growth markets such as China and India, as well as the United States; and
- Adds five research and development facilities to Dana’s network of technology centers.
“Oerlikon Drive Systems is a well-respected technology company that has provided exceptional product innovation and customer satisfaction for nearly a century,” says Jim Kamsickas, Dana president and CEO. “A great fit culturally, this investment will deliver significant long-term value by accelerating our commitment to vehicle electrification and strengthening the technology portfolio for each of our end markets while further expanding and balancing the manufacturing presence of our off-highway business in key geographical markets.”
“This strategic deployment of capital for inorganic growth strengthens our product portfolio, will be immediately accretive to earnings upon closing, will create incremental value for shareholders, and preserves our strong balance sheet,” says Jonathan Collins, executive vice president and chief financial officer.
Kamsickas adds: “Oerlikon’s technology will enable Dana to expand our product offerings for customers in the off-highway segment while complementing our rapidly growing portfolio of electrified product offerings for all end markets. Further, Oerlikon’s manufacturing and R&D footprint enhances our ability to serve many of our current customers while connecting us with new customers, especially in India and China.”
This transaction complements Dana’s strategy for accelerating hybridization and electrification and closely follows the company’s acquisition of TM4, which established Dana as the only supplier with full e-Propulsion design, engineering and manufacturing capabilities — offering electro-mechanical propulsion solutions to each of its end markets, according to an announcement.